What's New

Singpost has entered into a non-binding memorandum of understanding (MOU) with Y Ventureson 2 March 2018 to explore a potential collaboration for, amongst others:

An e-commerce buying platform, focussed on cross-border purchases on behalf of consumers, and consolidated deliveries; and

Logistics-related technology to enhance efficiency across the vertical logistics chain.

Y Ventures is a data analytics-driven, e-commerce retail and distribution company which was listed on Catalist in June 2017.

We note that both Singpost and Y Ventures are still negotiating the terms of definitive agreements.

Our initial thoughts

Singpost has good track record in handling cross-border volumes

Over the last few years, SingPost has gained traction in its international mail volumes, mainly from Alibaba, with international mail accounting for c. 60% of its total mail volumes as of 9MFY18.

Singpost's new Regional eCommerce Logistics Hub is able to handle large cross-border volumes and utilise its parcel sorting machine for parcel deliveries.

On e-commerce buying platform

Singpost's US entities, Jagged Peak and TradeGlobal, currently offer various e-commerce solutions to its clients. For example, Jagged Peak's cornerstone software technology can offer end-to-end solutions in

content management engine;

order management capabilities;

warehouse management;

and transportation management which can be integrated with clients’ internal systems.

E-commerce buying platform represents a new area of opportunity for Singpost's existing businesses. While the concept of e-commerce buying platforms on behalf of customers and consolidated deliveries is not new to Singapore – companies including Ezbuy have garnered good traffic in Singapore and in the region – we believe an e-commerce buying platform is somewhat a natural extension of Singpost's existing business, as Singpost already has existing logistics networks and investments in hardware, i.e. its Regional eCommerce Logistics Hub.

Singpost, with its strong logistics network locally and partnerships in the region, may have operational efficiencies compared to e-commerce buying platform competitors.

Other synergies to be drawn

While we believe an e-commerce buying platform is different from Singpost's existing technologies, we believe there are potential synergies to be drawn from collaboration with Y Ventures.

Logistics-related technology can also potentially help improve Singpost's existing operations.

Recommendation

We maintain our BUY call on Singpost, Target Price $1.61, and have yet to input any forecasts in relation to the potential collaboration with Y Ventures as both companies are still negotiating definitive terms.

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